October 31, 2007
 
Kroger, union face off
No new talks; first strike since '71 possible Saturday

If Kroger workers leave their jobs to go on strike at midnight Friday, Kroger managers might be bagging your groceries and stocking the shelves.

That's what happened the last time when Greater Cincinnati and Northern Kentucky Kroger workers went on strike 36 years ago.

Kroger is bracing for a possible strike again this weekend as the company and its 11,000 union workers remain far apart on issues including health-care coverage, wages and union demands for a fully funded pension.

The company and United Food and Commercial Workers Local 1099 stopped the scheduled contract negotiations Sunday. No new talks are scheduled, although both say they want to return to the bargaining table.

But the only movement Tuesday came when at least 1,000 union members gathered on Fountain Square late in the afternoon.

Comment: Would a strike change your shopping plans?
 

Sixteen charter buses brought most of the workers to the Square, many still in their work uniforms and yellow union T-shirts. After the rally, the workers marched to Kroger's Vine Street headquarters.

Judy Albers, 48, of Clifton, held a sign that called for Kroger CEO David Dillon to give up a $1 million pay incentive so workers could have more health-care benefits. She said she wasn't looking forward to a strike but was willing to do it.

The $100 a week in strike compensation from the union won't go very far, she said: "I'm a single mother. I have $600-a-month rent, utility payments and a 12-year-old daughter."

The union also has been calling Kroger customers in the region, asking them to tell their local Kroger store manager that they support the union.

The union Monday notified the company that it would revoke its 30-day contract extension. The action means that the local, which represents workers in Greater Cincinnati, Northern Kentucky and Dayton, Ohio, can now authorize a strike as soon as Saturday morning.

Kroger responded that it would seek replacement workers in the event of a strike. The company has interviewed job candidates. Kroger also turned up the heat when it distributed a two-page question-and-answer information sheet to workers at stores in the region, suggesting that workers should quit their union should a strike be called.

The memo indicated that workers who resigned from the union would keep the same wages and maintain seniority.

"I think they're trying to break the union," said Audrea Landrum, 68, an Independence, Ky., resident who is a part-time worker at the Independence store as a bakery helper.

Kroger spokeswoman Meghan Glynn said the company isn't trying to break the union but is informing its work force that in the event of a strike, company-paid health-care coverage would cease unless they keep working.

"We have a long relationship with UFCW," she said. "But actions this union has taken lately, well, we want to make sure our employees have the facts."

LOSE-LOSE SITUATION?

Experts say the company and its workers could both lose if a strike occurs because some shoppers might venture into competitors' stores and never return. Kroger struggled to rebuild business at its Ralphs stores in Southern California following its lockout of workers there in late 2003 and early 2004.

"No way am I going to shop at Kroger if there's a strike," Denise Penn, a 36-year-old College Hill resident and teacher at Douglass School in Walnut Hills, said Tuesday while leaving the Walnut Hills Kroger.

She belongs to the Cincinnati Federation of Teachers and said she would find somewhere else to buy her groceries rather than cross a union picket line.

"We union members have to look out for each other,'' she said.

Although Kroger settled the Southern California labor dispute with a contract widely considered a victory for the grocery chain - including a much lower pay scale for new hires and reduced health benefits - the 141-day California lockout resulted in a $947 million loss for the company.

If that happens here, it might be years before Kroger recovers any lost market share. Kroger led the market with a 56.4 percent share at the end of 2006, down from 59.7 percent the year before, according to MarketScope, a publication of Trade Dimensions International. Wal-Mart grew to 14.2 percent market share from 8 percent in 2005 and is No. 2 in grocery sales here.

"This is one town Kroger doesn't want to lose," said Richard Bales, a labor law expert and professor of law/associate dean for faculty development at the Chase College of Law at Northern Kentucky University.

"If they have home-field advantage, it's here. The last thing they want is a headline that Wal-Mart is beating them on their home field."

Fort Thomas resident Dave Mahaney, 68, said he could not care less about union picketers walking in front of stores.

"It won't stop me," he said. "You gotta eat."

PRESSURE COULD GET INTENSE

Union workers also will feel intense pressure as the deadline nears - and even greater stress if they go on strike. Their household income will be immediately hit.

"If Kroger is able to bring in strike replacements, it will be painful for workers to see jobs being done by somebody else," Bales said. "The economy isn't great, so it's going to be awfully tempting for folks to cross the picket line and work.

"A strike ratchets up the pressure on both sides."

Another threat for the company in the event of a strike comes if truck drivers who are members of another union refuse to deliver because of pickets.

"If they're union, they are likely to honor the picket line," Bales said. "Kroger then has more difficulty filling its stores and stocking shelves."

Doug Sizemore, executive secretary treasurer of the Cincinnati AFL-CIO, said there are 130 local unions representing about 100,000 people in the region, and those households support the UFCW local.

"Already, people are watching this and letting Kroger management know when they go into stores that they're dissatisfied with the way these negotiations are going," Sizemore said.

SLIM PROFIT MARGINS

The stakes are high for Kroger as well.

Supermarkets make about 2 cents' profit from every dollar spent, which leaves grocers more vulnerable to the whims of broad economic trends and selective consumer spending than many other retailers.

When a two-day strike hit a distribution warehouse near Louisville earlier this year, Dillon told Wall Street analysts that it cost the company 2 cents a share on earnings in the first quarter - about $11 million a day.

The company did use replacement workers there.

In the wake of that dispute, Kroger Co. paid $70 million in fines and worker restitution under an agreement stemming from criminal charges that its Ralphs Grocery Co. subsidiary illegally hired workers under fake names in the 2003-04 labor dispute.

The last strike against Kroger in this region was in 1971. Two thousand clerks and meat cutters went on strike for about three weeks.

Initially, supervisory personnel staffed the stores, according to an Enquirer account of the strike. Kroger vice presidents operated cash registers while computer IT managers stocked shelves.

Also, supervisors were brought into the region from Louisville, Dayton and Columbus to work.

The episode cost the company about $4 million in contract concessions, with workers losing $1.5 million in wages during the strike, company officials said at the time.